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PCE Tops 2%

It’s been a long time coming. But, the Fed’s favored measure of inflation finally topped its long-stated target of 2%. Of course, they prefer the “core PCE” which excludes food and energy price changes. Why? It’s lower, and at 1.8%, puts less pressure on them to normalize rates. Either one of them is preferable to the also understated CPI which, at 2.7% YoY last month (before another month of 28% gasoline price increases) comes closer to an accurate measure of inflation.

But, for accuracy, we have to look to alternative measures such as that of economist John Williams, who runs ShadowStats.com. For his primer on why actual inflation is so much greater than the BLS reports, CLICK HERE.

courtesy of ShadowStats.com

Nevertheless, futures aren’t loving the news, as it hints at a more hawkish pattern of rate hikes this year. But, with this being the end of the quarter, we’ll have to see what sort of follow through we actually get.